<PAGE>
American Life
SEPARATE ACCOUNT NO. 2
ANNUAL REPORT
&
ANNUAL REPORTS OF
MUTUAL OF AMERICA INVESTMENT CORPORATION
SCUDDER VARIABLE LIFE INVESTMENT FUND
AMERICAN CENTURY VP CAPITAL APPRECIATION FUND
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO
FIDELITY INVESTMENTS(R) VARIABLE INSURANCE PRODUCTS FUND:
EQUITY-INCOME PORTFOLIO
FIDELITY INVESTMENTS(R) VARIABLE INSURANCE PRODUCTS FUND II:
CONTRAFUND AND ASSET MANAGER PORTFOLIOS
DECEMBER 31, 1997
This report is not to be construed as an offering for sale of any Variable
Product. No offering is made except in conjunction with a prospectus which must
precede or accompany this report.
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
SEPARATE ACCOUNT NO. 2
ANNUAL REPORT
DECEMBER 31, 1997
Dear Policyowner:
We are pleased to send you the 1997 Annual Report of American Life's
Separate Account No. 2. This Account, which commenced operations in late 1993,
is an investment vehicle for owners of our Individual Retirement Annuity and
Flexible Premium Annuity contracts. Separate Account No. 2 consists of sixteen
distinct funds. Each invests in shares of one of eight funds of Mutual of
America Investment Corporation (the "Investment Company"): the Money Market,
All America, Equity Index, Bond, Short-Term Bond, Mid-Term Bond, Composite and
Aggressive Equity Funds; three portfolios of Scudder Variable Life Investment
Fund ("Scudder"): the Bond, Capital Growth and International Portfolios; the
VP Capital Appreciation Fund (formerly TCI Growth) of American Century
Variable Portfolios, Inc. ("American Century"); the Balanced Portfolio of
Acacia Capital Corporation's Calvert Responsibly Invested Portfolios
("Calvert"); the Equity-Income Portfolio of Fidelity Investments Variable
Insurance Products Fund ("Fidelity VIP"); and the Contrafund and Asset Manager
Portfolios of Fidelity Investments Variable Insurance Products Fund II
("Fidelity VIP II").
Each of the funds of Separate Account No. 2 owns shares in a similarly named
fund of the Investment Company, portfolio of Scudder, fund of American
Century, portfolio of Calvert, portfolio of Fidelity VIP and portfolio of
Fidelity VIP II. The investment results of each of the funds of Separate
Account No. 2 are based on the performance of the corresponding funds or
portfolios of the Investment Company, Scudder, American Century, Calvert,
Fidelity VIP and Fidelity VIP II.
The Separate Account funds invest in funds and portfolios which have the
following investment objectives:
THE INVESTMENT COMPANY MONEY MARKET FUND: This Fund seeks to obtain high
current income to the extent consistent with the maintenance of liquidity,
investment quality and stability of capital through investments in money
market instruments and other short-term debt securities.
THE INVESTMENT COMPANY ALL AMERICA FUND: The investment objective for
approximately 60% of the assets of this Fund (the "Indexed Assets") is to
provide investment results that, to the extent practical, correspond to the
performance of the Standard & Poor's Composite Index of 500 Stocks (the "S&P
500"). The Indexed Assets are invested in the same manner as the Equity Index
Fund described below. The investment objective for the remaining approximately
40% of the assets (the "Active Assets") is to achieve a high level of total
return, through both appreciation of capital and, to a lesser extent, current
income, by means of a diversified portfolio of securities that may include
common stocks, securities convertible into common stocks, bonds and money
market instruments.
THE INVESTMENT COMPANY EQUITY INDEX FUND: This Fund seeks to duplicate, as
closely as possible, the investment performance of the S&P 500 by investing in
approximately 500 publicly traded stocks that comprise the S&P 500 ("Standard
& Poor's 500", "S&P" and "S&P 500" are trademarks of Standard & Poor's
Corporation).
THE INVESTMENT COMPANY BOND FUND: This Fund seeks a high level of current
income, together with preservation of capital, through investments in such
securities as U.S. Government, corporate and other notes and bonds.
THE INVESTMENT COMPANY SHORT-TERM BOND FUND: This Fund seeks a high level of
current income, together with preservation of capital, through investments in
such securities as U.S. Government, corporate and other notes and bonds with
an average maturity of one to three years.
THE INVESTMENT COMPANY MID-TERM BOND FUND: This Fund seeks a high level of
current income, together with preservation of capital, through investments in
such securities as U.S. Government, corporate and other notes and bonds with
an average maturity of three to seven years.
THE INVESTMENT COMPANY COMPOSITE FUND: This Fund seeks a high total rate of
return on investments, through both appreciation of capital and current
income, through investments in a diversified portfolio of common stocks, bonds
and money market instruments.
THE INVESTMENT COMPANY AGGRESSIVE EQUITY FUND: The investment objective for
approximately half of the assets of the Fund is to achieve capital
appreciation by investing in companies believed to possess above-average
growth potential.
I
<PAGE>
Growth can be in the areas of earnings or gross sales which can be measured in
either dollars or in unit volume. The investment objective for the other half
of the assets of the Fund is to achieve capital appreciation by investing in
companies believed to possess valuable assets or whose securities are
undervalued in the marketplace in relation to factors such as a company's
assets, earnings or growth potential.
THE SCUDDER BOND PORTFOLIO: This Portfolio seeks a high level of income
consistent with the prudent investment of capital through a flexible
investment program emphasizing high-grade bonds.
THE SCUDDER CAPITAL GROWTH PORTFOLIO: This Portfolio seeks to maximize long-
term capital growth by investing primarily in common stocks of medium-to-large
sized U.S. companies. The Portfolio seeks to keep the value of its shares more
stable than other capital growth mututal funds. While current income is not a
stated objective of the Portfolio, many of the Portfolio's securities may
provide regular dividends, which are also expected to grow over time.
THE SCUDDER INTERNATIONAL PORTFOLIO: This Portfolio seeks long-term growth
of capital primarily through a diversified portfolio of foreign equity
securities.
THE VP CAPITAL APPRECIATION FUND: This Fund seeks capital growth over time
by investing primarily in common stocks that are considered by management to
have better-than-average prospects for appreciation. (Prior to May 1, 1997,
this Fund was known as TCI Growth Fund).
THE CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO: This Portfolio seeks a
total return above the rate of inflation through an actively managed portfolio
of stocks, bonds and money market instruments selected with a concern for the
social impact of each investment. (As of January 1, 1998, the name was changed
to Calvert Social Balanced Portfolio).
THE FIDELITY VIP EQUITY-INCOME PORTFOLIO: This Portfolio seeks reasonable
income by investing primarily in income-producing equity securities, while
considering the potential for capital appreciation. The Portfolio also seeks
to achieve a yield that exceeds the composite yield on the securities
comprising the S&P 500.
THE FIDELITY VIP II CONTRAFUND PORTFOLIO: This Portfolio seeks long-term
capital appreciation by investing primarily in a broad variety of common
stocks using both growth-oriented and contrarian disciplines.
THE FIDELITY VIP II ASSET MANAGER PORTFOLIO: This Portfolio seeks high long-
term return with reduced risk by using a broadly diversified mix of stocks,
bonds and short-term fixed-income investments.
For the year ended December 31, 1997, the following total returns were
experienced in these sixteen Separate Account funds:
<TABLE>
<S> <C> <C>
Investment Company Money Market Fund(1).......................... + 3.9%
Investment Company All America Fund.............................. + 24.9%
Investment Company Equity Index Fund............................. + 31.1%
Investment Company Bond Fund..................................... + 8.8%
Investment Company Short-Term Bond Fund.......................... + 4.4%
Investment Company Mid-Term Bond Fund............................ + 5.7%
Investment Company Composite Fund................................ + 15.9%
Investment Company Aggressive Equity Fund........................ + 19.4%
Scudder Bond Fund................................................ + 7.4%
Scudder Capital Growth Fund...................................... + 33.7%
Scudder International Fund....................................... + 7.4%
American Century VP Capital Appreciation Fund.................... - 4.5%
Calvert Responsibly Invested Balanced Fund....................... + 18.3%
Fidelity VIP Equity-Income Fund.................................. + 26.3%
Fidelity VIP II Contrafund....................................... + 22.4%
Fidelity VIP II Asset Manager Fund............................... + 18.9%
</TABLE>
-------
(1) The current seven-day net annualized yield as of 2/17/98 was 4.15% and is
not necessarily indicative of future actual yields.
Total return is equal to the changes in the value of a unit of participation
in a fund from the beginning to the end of the specified period. It reflects
investment income earned and reinvested plus the changes in the market value
(whether realized or unrealized) of the securities in the respective fund or
portfolio of the Investment Company, Scudder, American Century,
II
<PAGE>
Calvert or Fidelity during the indicated period. Results are net of all
charges, including a monthly service charge (assessed against an average
account balance for all individually allocated contracts) based upon a
hypothetical $1,000 invested at the beginning of the period. These returns are
not guaranteed and are not necessarily indicative of the future investment
performance of the particular fund. Withdrawals and contributions made within
a period would experience different rates of return based on the respective
unit values on the dates of such transactions.
This report includes financial statements for each fund of Separate Account
No. 2. Following this report are the financial statements for each similarly
named fund of the Investment Company, portfolio of Scudder, fund of American
Century, portfolio of Calvert and portfolios of Fidelity VIP and VIP II.
I hope you will find this report helpful and informative.
Sincerely,
/s/ Manfred Altstadt
Manfred Altstadt
Senior Executive Vice President
and Chief Financial Officer,
The American Life Insurance Company of
New York
III
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ANNUAL REPORT OF AMERICAN LIFE SEPARATE ACCOUNT NO. 2.................... I
Statement of Assets and Liabilities..................................... V
Statement of Operations................................................. VII
Statements of Changes in Net Assets..................................... IX
Notes to Financial Statements........................................... XII
Report of Independent Public Accountants................................ XVI
ANNUAL REPORT OF MUTUAL OF AMERICA INVESTMENT CORPORATION................ 1
President's Message..................................................... 1
Portfolio Management Discussions........................................ 2
Portfolio of Investments in Securities:
Money Market Fund..................................................... 9
All America Fund...................................................... 10
Equity Index Fund..................................................... 19
Bond Fund............................................................. 25
Short-Term Bond Fund.................................................. 28
Mid-Term Bond Fund.................................................... 30
Composite Fund........................................................ 32
Aggressive Equity Fund................................................ 36
Statement of Assets and Liabilities...................................... 39
Statement of Operations.................................................. 40
Statements of Changes in Net Assets...................................... 41
Financial Highlights..................................................... 43
Notes to Financial Statements............................................ 49
Report of Independent Public Accountants................................. 54
ANNUAL REPORT OF SCUDDER VARIABLE LIFE INVESTMENT FUND
ANNUAL REPORT OF VP CAPITAL APPRECIATION FUND OF AMERICAN CENTURY
VARIABLE PORTFOLIOS, INC.
ANNUAL REPORT OF CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO OF
ACACIA CAPITAL CORPORATION
ANNUAL REPORT OF FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND:
EQUITY-INCOME PORTFOLIO
ANNUAL REPORT OF FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND
II: CONTRAFUND PORTFOLIO
ANNUAL REPORT OF FIDELITY INVESTMENTS VARIABLE INSURANCE PRODUCTS FUND
II: ASSET MANAGER PORTFOLIO
</TABLE>
IV
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
INVESTMENT COMPANY
------------------------------------------------
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
Assets:
Investments in Mutual of America
Investment Corporation at
market value
(Cost:
Money Market Fund -- $182,518
All America Fund -- $5,832,577
Equity Index Fund -- $5,064,845
Bond Fund -- $919,962)
(Notes 1 and 2).................. $175,683 $6,204,754 $5,611,917 $ 900,849
Due From (To) General Account..... 1,022 6,395 20,085 2,655
-------- ---------- ---------- ----------
Net Assets........................ $176,705 $6,211,149 $5,632,002 $ 903,504
======== ========== ========== ==========
Unit Value at December 31, 1997
(Note 5)......................... $1.95 $6.76 $2.26 $3.00
===== ===== ===== =====
Number of Units Outstanding at
December 31, 1997 (Note 5)....... 90,542 919,295 2,496,288 301,512
======== ========== ========== ==========
<CAPTION>
INVESTMENT COMPANY
------------------------------------------------
AGGRESSIVE
SHORT-TERM MID-TERM COMPOSITE EQUITY
BOND FUND BOND FUND FUND FUND
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
Assets:
Investments in Mutual of America
Investment Corporation at
market value
(Cost:
Short-Term Bond Fund -- $29,896
Mid-Term Bond Fund -- $66,446
Composite Fund -- $3,202,469
Aggressive Equity Fund --
$4,931,300)
(Notes 1 and 2).................. $ 28,900 $ 61,337 $2,804,213 $4,927,701
Due From (To) General Account,.... 128 388 1,505 (14)
-------- ---------- ---------- ----------
Net Assets........................ $ 29,028 $ 61,725 $2,805,718 $4,927,687
======== ========== ========== ==========
Unit Value at December 31, 1997
(Note 5)......................... $1.19 $1.26 $4.36 $2.15
===== ===== ===== =====
Number of Units Outstanding at
December 31, 1997 (Note 5)....... 24,344 49,001 643,537 2,289,562
======== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
V
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
AMERICAN
SCUDDER CENTURY
-------------------------------- ------------
CAPITAL VP CAPITAL
BOND GROWTH INTERNATIONAL APPRECIATION
FUND FUND FUND FUND
------- ---------- ------------- ------------
<S> <C> <C> <C> <C>
Assets:
Investments in Scudder Portfolios and
American Century VP Capital
Appreciation Fund at market value
(Cost:
Scudder Bond Fund -- $95,240
Scudder Capital Growth Fund --
$4,294,200
Scudder International Fund --
$1,490,322
American Century VP
Capital Appreciation Fund -- $528,932)
(Notes 1 and 2)........................ $97,540 $4,731,009 $1,500,620 $486,885
Due From (To) General Account........... 503 7,217 (369,959) 1,970
------- ---------- ---------- --------
Net Assets.............................. $98,043 $4,738,226 $1,130,661 $488,855
======= ========== ========== ========
Unit Value at December 31, 1997 (Note
5)..................................... $12.37 $29.64 $14.46 $11.04
====== ====== ====== ======
Number of Units Outstanding at December
31, 1997 (Note 5)...................... 7,927 159,853 78,166 44,293
======= ========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
CALVERT FIDELITY
----------- -------------------------------------
VIP VIP II VIP II
RESPONSIBLY EQUITY-
INVESTED INCOME CONTRA ASSET MANAGER
FUND FUND FUND FUND
----------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments in Calvert Responsibly Invested
Portfolio and Fidelity Portfolios at market
value
(Cost:
Calvert Responsibly Invested Fund --
$478,377
VIP Equity-Income Fund -- $2,255,545
VIP II Contra Fund -- $3,576,502
VIP II Asset Manager Fund -- $1,232,639)
(Notes 1 and 2)............................ $511,634 $2,626,934 $4,329,466 $1,366,985
Due From (To) General Account............... 2,498 (10,380) (1,571) 9,680
-------- ---------- ---------- ----------
Net Assets.................................. $514,132 $2,616,554 $4,327,895 $1,376,665
======== ========== ========== ==========
Unit Value at December 31, 1997 (Note 5).... $2.65 $27.77 $20.36 $21.14
===== ====== ====== ======
Number of Units Outstanding at December 31,
1997 (Note 5).............................. 194,166 94,213 212,606 65,125
======== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
VI
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
INVESTMENT COMPANY
-------------------------------------------------
MONEY MARKET ALL AMERICA EQUITY INDEX BOND
FUND FUND FUND FUND
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends................... $10,948 $ 760,232 $ 116,246 $ 57,855
------- --------- --------- ---------
Total Income................. 10,948 760,232 116,246 57,855
------- --------- --------- ---------
Expenses (Note 3):
Fees........................ 1,893 59,087 45,855 9,983
Administrative Expenses..... 752 7,024 3,605 1,418
------- --------- --------- ---------
Total Expenses............... 2,645 66,111 49,460 11,401
------- --------- --------- ---------
Net Investment Income (loss). 8,303 694,121 66,786 46,454
------- --------- --------- ---------
Net Realized and Unrealized
Gain (Loss) on Investments
(Note 1):...................
Net realized gain (loss) on
investments................ 22 100,040 210,401 (15,444)
Net unrealized appreciation
(depreciation) of
investments................ (2,891) 170,608 524,908 32,882
------- --------- --------- ---------
Net Realized and Unrealized
Gain (Loss) on Investments.. (2,869) 270,648 735,309 17,438
------- --------- --------- ---------
Net Increase (Decrease) in
Net Assets Resulting from
Operations.................. $ 5,434 $ 964,769 $ 802,095 $ 63,892
======= ========= ========= =========
<CAPTION>
INVESTMENT COMPANY
-------------------------------------------------
SHORT-TERM MID-TERM COMPOSITE AGGRESSIVE
BOND FUND BOND FUND FUND EQUITY FUND
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends................... $ 1,815 $ 3,771 $ 621,108 $ 490,328
------- --------- --------- ---------
Total income................. 1,815 3,771 621,108 490,328
------- --------- --------- ---------
Expenses (Note 3):
Fees........................ 309 1,450 27,363 49,755
Administrative Expenses..... 139 228 3,787 2,257
------- --------- --------- ---------
Total Expenses............... 448 1,678 31,150 52,012
------- --------- --------- ---------
Net Investment Income (Loss). 1,367 2,093 589,958 438,316
------- --------- --------- ---------
Net Realized and Unrealized
Gain (Loss) on Investments
(Note 1):...................
Net realized gain (loss) on
investments................ 24 (34,118) 6,592 130,789
Net unrealized appreciation
(depreciation) of
investments................ (388) 35,334 (267,950) 54,244
------- --------- --------- ---------
Net Realized and Unrealized
Gain (Loss) on Investments.. (364) 1,216 (261,358) 185,033
------- --------- --------- ---------
Net Increase (Decrease) in
Net Assets Resulting from
Operations.................. $ 1,003 $ 3,309 $ 328,600 $ 623,349
======= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
VII
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
AMERICAN
SCUDDER CENTURY
--------------------------------------- -------------
CAPITAL VP CAPITAL
BOND GROWTH INTERNATIONAL APPRECIATION
FUND FUND FUND FUND
----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends............... $ 3,541 $145,377 $ 17,852 $ 14,033
------- -------- -------- --------
Total income............. 3,541 145,377 17,852 14,033
------- -------- -------- --------
Expenses (Note 3):
Fees.................... 734 35,461 12,751 6,525
Administrative Expenses. 599 1,537 309 211
------- -------- -------- --------
Total Expenses........... 1,333 36,998 13,060 6,736
------- -------- -------- --------
Net Investment Income
(Loss).................. 2,208 108,379 4,792 7,297
------- -------- -------- --------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note 1):
Net realized gain (loss)
on investments......... 285 281,436 114,508 (22,217)
Net unrealized
appreciation
(depreciation) of
investments............ 2,025 271,584 (23,785) 7,089
------- -------- -------- --------
Net Realized and
Unrealized Gain (Loss)
on Investments.......... 2,310 553,020 90,723 (15,128)
------- -------- -------- --------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... $ 4,518 $661,399 $ 95,515 $ (7,831)
======= ======== ======== ========
<CAPTION>
CALVERT FIDELITY
----------- -----------------------------------------
RESPONSIBLY VIP VIP II VIP II
INVESTED EQUITY-INCOME CONTRA ASSET MANAGER
FUND FUND FUND FUND
----------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Investment Income and
Expenses:
Income (Notes 1 and 4):
Dividends............... $35,586 $147,393 $ 87,685 $ 82,858
------- -------- -------- --------
Total income............. 35,586 147,393 87,685 82,858
------- -------- -------- --------
Expenses (Note 3):
Fees.................... 4,631 23,891 40,155 11,510
Administrative Expenses. 938 4,274 2,788 1,403
------- -------- -------- --------
Total Expenses........... 5,569 28,165 42,943 12,913
------- -------- -------- --------
Net Investment Income
(Loss).................. 30,017 119,228 44,742 69,945
------- -------- -------- --------
Net Realized and
Unrealized Gain (Loss)
on Investments (Note 1):
Net realized gain (loss)
on investments......... 3,585 67,484 111,794 5,525
Net unrealized
appreciation
(depreciation) of
investments............ 27,151 260,021 462,114 86,433
------- -------- -------- --------
Net Realized and
Unrealized Gain (Loss)
on Investments.......... 30,736 327,505 573,908 91,958
------- -------- -------- --------
Net Increase (Decrease)
in Net Assets Resulting
from Operations......... $60,753 $446,733 $618,650 $161,903
======= ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
VIII
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
INVESTMENT COMPANY
--------------------------------------------------------------------
MONEY MARKET ALL AMERICA FUND EQUITY INDEX FUND
-------------------- ---------------------- ----------------------
1997 1996 1997 1996 1997 1996
--------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 8,303 $ 1,708 $ 694,121 $ 123,170 $ 66,786 $ 35,099
Net realized gain
(loss) on investments. 22 (639) 100,040 131,267 210,401 82,968
Net unrealized
appreciation
(depreciation)
of investments........ (2,891) 812 170,608 158,864 524,908 10,360
--------- --------- ---------- ---------- ---------- ----------
Net Increase (Decrease)
in net assets resulting
from operations........ 5,434 1,881 964,769 413,301 802,095 128,427
--------- --------- ---------- ---------- ---------- ----------
From Unit Transactions:
Contributions.......... 83,909 181,254 1,823,327 1,923,323 2,404,743 1,006,616
Withdrawals............ (21,211) (105,802) (456,949) (467,717) (255,564) (601,063)
Net Transfers.......... (15,293) (66,628) 527,066 399,364 1,207,296 466,940
--------- --------- ---------- ---------- ---------- ----------
Net Increase (Decrease)
from unit transactions. 47,405 8,824 1,893,444 1,854,970 3,356,475 872,493
--------- --------- ---------- ---------- ---------- ----------
Net Increase (Decrease)
in Net Assets.......... 52,839 10,705 2,858,213 2,268,271 4,158,570 1,000,920
Net Assets:
Beginning of Year....... 123,866 113,161 3,352,936 1,084,665 1,473,432 472,512
--------- --------- ---------- ---------- ---------- ----------
End of Year............. $ 176,705 $ 123,866 $6,211,149 $3,352,936 $5,632,002 $1,473,432
========= ========= ========== ========== ========== ==========
<CAPTION>
INVESTMENT COMPANY
--------------------------------------------------------------------
SHORT-TERM MID-TERM
BOND FUND BOND FUND BOND FUND
-------------------- ---------------------- ----------------------
1997 1996 1997 1996 1997 1996
--------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 46,454 $ 50,654 $ 1,367 $ 544 $ 2,093 $ 40,162
Net realized gain
(loss) on investments. (15,444) 561 24 13 (34,118) (136)
Net unrealized
appreciation
(depreciation)
of investments........ 32,882 (52,401) (388) (480) 35,334 (39,780)
--------- --------- ---------- ---------- ---------- ----------
Net Increase (Decrease)
in net assets resulting
from operations........ 63,892 (1,186) 1,003 77 3,309 246
--------- --------- ---------- ---------- ---------- ----------
From Unit Transactions:
Contributions.......... 249,039 666,539 14,842 15,543 18,408 27,912
Withdrawals............ (55,507) (115,522) (1,270) (1,474) (79,572) (20,124)
Net Transfers.......... (256,192) 176,333 (5,813) 294 (190,378) 280,396
--------- --------- ---------- ---------- ---------- ----------
Net Increase (Decrease)
from unit transactions. (62,660) 727,350 7,759 14,363 (251,542) 288,184
--------- --------- ---------- ---------- ---------- ----------
Net Increase (Decrease)
in Net Assets.......... 1,232 726,164 8,762 14,440 (248,233) 288,430
Net Assets:
Beginning of Year....... 902,272 176,108 20,266 5,826 309,958 21,528
--------- --------- ---------- ---------- ---------- ----------
End of Year............. $ 903,504 $ 902,272 $ 29,028 $ 20,266 $ 61,725 $ 309,958
========= ========= ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
IX
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
INVESTMENT COMPANY
------------------------------------------------
COMPOSITE FUND AGGRESSIVE EQUITY FUND
---------------------- ------------------------
1997 1996 1997 1996
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net
Assets:
From Operations:
Net investment income
(loss)..................... $ 589,958 $ 189,648 $ 438,316 $ 340,535
Net realized gain (loss) on
investments................ 6,592 (10,035) 130,789 113,218
Net unrealized appreciation
(depreciation) of
investments................ (267,950) (69,001) 54,244 (71,005)
---------- ---------- ----------- -----------
Net Increase (Decrease) in
net assets resulting from
operations.................. 328,600 110,612 623,349 382,748
---------- ---------- ----------- -----------
From Unit Transactions:
Contributions............... 882,737 957,159 1,846,599 1,334,514
Withdrawals................. (182,378) (394,678) (278,875) 13,683
Net Transfers............... 65,188 81,515 243,989 (97,433)
---------- ---------- ----------- -----------
Net Increase (Decrease) from
unit transactions........... 765,547 643,996 1,811,713 1,250,764
---------- ---------- ----------- -----------
Net Increase (Decrease) in
Net Assets.................. 1,094,147 754,608 2,435,062 1,633,512
Net Assets:
Beginning of Year............ 1,711,571 956,963 2,492,625 859,113
---------- ---------- ----------- -----------
End of Year.................. $2,805,718 $1,711,571 $ 4,927,687 $ 2,492,625
========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SCUDDER
-----------------------------------------------------------------
BOND FUND CAPITAL GROWTH FUND INTERNATIONAL FUND
------------------ ---------------------- ---------------------
1997 1996 1997 1996 1997 1996
-------- -------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................ $ 2,208 $ 1,841 $ 108,379 $ 65,921 $ 4,792 $ 2,996
Net realized gain
(loss) on investments. 285 (844) 281,436 41,159 114,508 43,909
Net unrealized
appreciation
(depreciation) of
investments........... 2,025 (511) 271,584 86,006 (23,785) 24,939
-------- -------- ---------- ---------- ---------- ---------
Net Increase (Decrease)
in net assets resulting
from operations........ 4,518 486 661,399 193,086 95,515 71,844
-------- -------- ---------- ---------- ---------- ---------
From Unit Transactions:
Contributions.......... 58,335 36,598 1,686,187 774,932 408,312 325,676
Withdrawals............ (18,824) (28,324) (318,095) (338,868) (110,707) (187,224)
Net Transfers.......... 9,512 8,527 1,080,629 209,415 (204,358) 381,535
-------- -------- ---------- ---------- ---------- ---------
Net Increase (Decrease)
from unit transactions. 49,023 16,801 2,448,721 645,479 93,247 519,987
-------- -------- ---------- ---------- ---------- ---------
Net Increase (Decrease)
in Net Assets.......... 53,541 17,287 3,110,120 838,565 188,762 591,831
Net Assets:
Beginning of Year....... 44,502 27,215 1,628,106 789,541 941,899 350,068
-------- -------- ---------- ---------- ---------- ---------
End of Year............. $ 98,043 $ 44,502 $4,738,226 $1,628,106 $1,130,661 $ 941,899
======== ======== ========== ========== ========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
X
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
AMERICAN CENTURY CALVERT
-------------------- ------------------
VP CAPITAL RESPONSIBLY
APPRECIATION FUND INVESTED FUND
-------------------- ------------------
1997 1996 1997 1996
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
From Operations:
Net investment income (loss)........ $ 7,297 $ 72,186 $ 30,017 $ 14,195
Net realized gain (loss) on
investments........................ (22,217) (24,573) 3,585 19,117
Net Unrealized appreciation
(depreciation) of investments...... 7,089 (76,750) 27,151 (14,038)
--------- --------- -------- --------
Net Increase (Decrease) in net assets
resulting from operations........... (7,831) (29,137) 60,753 19,274
--------- --------- -------- --------
From Unit Transactions:
Contributions....................... 163,525 563,738 208,235 146,610
Withdrawals......................... (84,674) (154,878) (31,570) (34,382)
Net Transfers....................... (362,546) (288,819) 52,146 1,935
--------- --------- -------- --------
Net Increase (Decrease) from unit
transactions........................ (283,695) 120,041 228,811 114,163
--------- --------- -------- --------
Net Increase (Decrease) in Net
Assets.............................. (291,526) 90,904 289,564 133,437
Net Assets:
Beginning of Year.................... 780,381 689,477 224,568 91,131
--------- --------- -------- --------
End of Year.......................... $ 488,855 $ 780,381 $514,132 $224,568
========= ========= ======== ========
</TABLE>
<TABLE>
<CAPTION>
FIDELITY
--------------------------------------------------------------------
VIP VIP II VIP II
EQUITY-INCOME CONTRA ASSET MANAGER
FUND FUND FUND
---------------------- ---------------------- --------------------
1997 1996 1997 1996 1997 1996
---------- ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Increase (Decrease) in
Net Assets:
From Operations:
Net investment income
(loss)................. $ 119,228 $ 13,554 $ 44,742 $ (15,320) $ 69,945 $ 5,594
Net realized gain (loss)
on investments......... 67,484 20,214 111,794 21,162 5,525 1,185
Net Unrealized
appreciation
(depreciation) of
investments............ 260,021 92,537 462,114 287,039 86,433 44,376
---------- ---------- ---------- ---------- ---------- --------
Net Increase (Decrease)
in net assets resulting
from operations........ 446,733 126,305 618,650 292,881 161,903 51,155
---------- ---------- ---------- ---------- ---------- --------
From Unit Transactions:
Contributions........... 1,025,900 1,093,823 1,479,493 1,028,719 579,341 438,727
Withdrawals............. (301,479) (79,489) (140,441) (263,384) (79,334) (29,116)
Net Transfers........... 108,120 (152,309) (173,641) 1,082,254 61,271 105,633
---------- ---------- ---------- ---------- ---------- --------
Net Increase (Decrease)
from unit transactions. 832,541 862,025 1,165,411 1,847,589 561,278 515,244
---------- ---------- ---------- ---------- ---------- --------
Net Increase (Decrease)
in Net Assets.......... 1,279,274 988,330 1,784,061 2,140,470 723,181 566,399
Net Assets:
Beginning of Year....... 1,337,280 348,950 2,543,834 403,364 653,484 87,085
---------- ---------- ---------- ---------- ---------- --------
End of Year............. $2,616,554 $1,337,280 $4,327,895 $2,543,834 $1,376,665 $653,484
========== ========== ========== ========== ========== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
XI
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION
Separate Account No. 2 of The American Life Insurance Company of New York
("Company") was established in conformity with New York Insurance Law and
commenced operations on November 19, 1993 as a unit investment trust. On that
date, the following American Life funds became available as investment
alternatives: Money Market Fund, All America Fund, Equity Index Fund, Bond
Fund, Short-Term Bond Fund, Mid-Term Bond Fund, Composite Fund, Scudder Bond
Fund, Scudder Capital Growth Fund, Scudder International Fund, American
Century VP Capital Appreciation Fund (formerly the TCI Growth Fund), and
Calvert Responsibly Invested Balanced Fund. The American Life funds invest in
a corresponding fund of Mutual of America Investment Corporation ("Investment
Company"), portfolio of Scudder Variable Life Investment Fund ("Scudder"),
fund of American Century Variable Portfolios Inc. ("American Century") and a
corresponding fund of Calvert Responsibly Invested Balanced Portfolio of
Acacia Capital Corporation ("Calvert").
On May 2, 1994 the Investment Company Aggressive Equity Fund became
available as an investment alternative to Separate Account No. 2. Also, prior
to May 2, 1994 the All America Fund was known as the Stock Fund and had a
different objective and no sub-advisors.
On May 1, 1995, Fidelity Investments' Equity-Income, Contrafund and Asset
Manager Funds became available to Separate Account No. 2 as investment
alternatives. The Fidelity Equity-Income Fund invests in the corresponding
portfolio of Fidelity Variable Insurance Products Fund and the Contrafund and
Asset Manager Funds invest in the corresponding portfolios of Fidelity
Variable Insurance Products Fund II (collectively, "Fidelity").
Separate Account No. 2 was formed by the Company to support the operations
of the Company's group and individual variable accumulation annuity contracts
("Contracts"). The assets of Separate Account No. 2 are the property of the
Company. The portion of Separate Account No. 2's assets applicable to the
Contracts will not be charged with liabilities arising out of any other
business the Company may conduct.
The significant accounting policies of Separate Account No. 2 are as
follows:
Investment Valuation -- Investments are made in shares of the Investment
Company, Scudder, American Century, Calvert and Fidelity and are valued at the
reported net asset values of the respective Funds or Portfolios.
Investment Transactions -- Investment transactions are recorded on the trade
date. Realized gains and losses on sales of investments are determined based
on the average cost of the investment sold.
Federal Income Taxes -- Separate Account No. 2 will be treated as a part of
the Company and will not be taxed separately as a "regulated investment
company" under existing law. The Company is taxed as a life insurance company
under the life insurance tax provisions of the Internal Revenue Code of 1986.
No provision for income taxes is required in the accompanying financial
statements.
2. INVESTMENTS
The number of shares owned by Separate Account No. 2 and their respective
net asset values (rounded to the nearest cent) per share at December 31, 1997
are as follows:
<TABLE>
<CAPTION>
NUMBER OF SHARES NET ASSET VALUE
---------------- ---------------
<S> <C> <C>
Investment Company Funds:
Money Market Fund...................... 149,299 $1.18
All America Fund....................... 2,289,046 2.71
Equity Index Fund...................... 2,700,582 2.08
Bond Fund.............................. 631,182 1.43
Short-Term Bond Fund................... 28,308 1.02
Mid-Term Bond Fund..................... 67,940 0.90
Composite Fund......................... 1,728,994 1.62
Aggressive Equity Fund................. 3,065,995 1.61
</TABLE>
XII
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF SHARES NET ASSET VALUE
---------------- ---------------
<S> <C> <C>
Scudder Portfolios:
Bond Portfolio.......................... 14,198 $ 6.87
Capital Growth Portfolio--Class "A"..... 229,327 20.63
International Portfolio--Class "A"...... 106,351 14.11
American Century VP Capital Appreciation
Fund.................................... 50,298 9.68
Calvert Responsibly Invested Balanced
Portfolio............................... 258,143 1.98
Fidelity Portfolios:
Equity-Income--"Initial" Class.......... 108,193 24.28
Contrafund--"Initial" Class............. 217,125 19.94
Asset Manager--"Initial" Class.......... 75,901 18.01
</TABLE>
3. EXPENSES
Administrative Charges -- In connection with its administrative functions,
the Company deducts daily, at an annual rate of .40%, an amount from the value
of the net assets of all funds except the VP Capital Appreciation Fund for
which the annual rate is .20% and, effective in 1997, each Fidelity fund, for
which the annual rate is .30%.
In addition, a deduction of up to $2.00 may be made at the end of each month
from a participant's account, except that such charge shall not exceed 1/12 of
1% of the balance in such account in any month.
Distribution Expense Charge -- The Insurance Company will make a deduction
daily from the value of the net assets of each fund, at an annual rate of
.35%, to cover anticipated distribution expenses.
Mortality and Expense Risk Charge -- The Company assumes the risk to make
annuity payments in accordance with annuity tables provided in the Contracts
regardless of how long a participant lives and also assumes certain expense
risks associated with such annuity payments. For assuming the risk, the
Company deducts daily, at an annual rate of .50%, an amount from the value of
the net assets of each fund.
4. DIVIDENDS
All dividend distributions are reinvested in additional shares of the
respective funds or portfolios at net asset value. On December 30, 1997 a
dividend was declared by the Investment Company to shareholders of record as
of December 30, 1997 and was paid on December 31, 1997. Previous thereto, the
Investment Company declared and paid a dividend distribution on September 15,
1997. The combined amount of these dividends was as follows:
<TABLE>
<S> <C>
Money Market Fund................................................. $ 10,948
All America Fund.................................................. 760,232
Equity Index Fund................................................. 116,246
Bond Fund......................................................... 57,855
Short-Term Bond Fund.............................................. 1,815
Mid-Term Bond Fund................................................ 3,771
Composite Fund.................................................... 621,108
Aggressive Equity Fund............................................ 490,328
</TABLE>
On January 29, 1997, February 26, 1997, April 28, 1997, July 29, 1997 and
October 29, 1997, dividends were paid by the Scudder Bond Portfolio. The
combined amount of the dividends was $3,541.
On January 29, 1997, February 26, 1997, April 28, 1997, July 29, 1997 and
October 29, 1997, dividends were paid by the Scudder Capital Growth Portfolio.
The combined amount of the dividends was $145,377.
On February 26, 1997 a dividend was paid by the Scudder International
Portfolio. The amount of the dividend was $17,852.
XIII
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
On March 29, 1997 a dividend was paid by the American Century VP Capital
Appreciation Fund. The amount of the dividend was $14,033.
On December 31, 1997, a dividend was paid by the Calvert Responsibly
Invested Portfolio. The amount of the dividend was $35,586.
On February 7, 1997 a dividend was paid by the Fidelity Equity-Income
Portfolio. The amount of the dividend was $147,393.
On February 7, 1997, a dividend was paid by the Fidelity Contrafund
Portfolio. The amount of the dividend was $87,685.
On February 7, 1997, a dividend was paid by the Fidelity Asset Manager
Portfolio. The amount of the dividend was $82,858.
5. FINANCIAL HIGHLIGHTS
Shown below are financial highlights for a Unit outstanding throughout the
year ended December 31, 1997 and each of the previous years or, if not in
existence a full year, the initial period ended December 31:
<TABLE>
<CAPTION>
INVESTMENT COMPANY
----------------------------------------------------------------------
MONEY MARKET FUND ALL AMERICA FUND
-------------------------------- -------------------------------------
1997 1996 1995 1994 1997 1996 1995 1994 1993
--------- ------- ------- ------ ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $1.87 $1.80 $1.72 $1.68 $5.39 $4.52 $3.35 $3.36 $3.31
========= ======= ======= ====== ======= ======= ======= ====== ======
Unit value, end of
year/period............ $1.95 $1.87 $1.80 $1.72 $6.76 $5.39 $4.52 $3.35 $3.36
========= ======= ======= ====== ======= ======= ======= ====== ======
Units outstanding, end
of year/period......... 90,542 66,104 62,822 29,648 919,295 621,536 239,745 91,238 27
========= ======= ======= ====== ======= ======= ======= ====== ======
<CAPTION>
INVESTMENT COMPANY
----------------------------------------------------------------------
EQUITY INDEX FUND BOND FUND
---------------------------------------- -----------------------------
1997 1996 1995 1994 1993 1997 1996 1995 1994
--------- ------- ------- ------ ------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $1.72 $1.42 $1.05 $1.05 $1.04 $2.75 $2.69 $2.28 $2.39
========= ======= ======= ====== ======= ======= ======= ====== ======
Unit value, end of
year/period............ $2.26 $1.72 $1.42 $1.05 $1.05 $3.00 $2.75 $2.69 $2.28
========= ======= ======= ====== ======= ======= ======= ====== ======
Units outstanding, end
of year/period......... 2,496,288 858,298 333,578 35,717 185 301,512 328,371 65,503 23,434
========= ======= ======= ====== ======= ======= ======= ====== ======
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
-----------------------------------------------------
SHORT-TERM MID-TERM
BOND FUND BOND FUND
------------------------- ---------------------------
1997 1996 1995 1994 1997 1996 1995 1994
------ ------ ----- ----- ------ ------- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............. $1.14 $1.10 $1.03 $1.03 $1.19 $1.16 $1.01 $1.06
====== ====== ===== ===== ====== ======= ====== =====
Unit value, end of
year/period............. $1.19 $1.14 $1.10 $1.03 $1.26 $1.19 $1.16 $1.01
====== ====== ===== ===== ====== ======= ====== =====
Units outstanding, end of
year/period............. 24,344 17,798 5,302 3,639 49,001 260,862 18,581 3,694
====== ====== ===== ===== ====== ======= ====== =====
</TABLE>
<TABLE>
<CAPTION>
INVESTMENT COMPANY
-------------------------------------------------------------------------
COMPOSITE FUND AGGRESSIVE EQUITY FUND
------------------------------------- ---------------------------------------
1997 1996 1995 1994 1993 1997 1996 1995 1994
------- ------- ------- ------- ----- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $3.75 $3.39 $2.82 $2.95 $2.93 $1.80 $1.43 $1.05 $1.00
======= ======= ======= ======= ===== ========= ========= ======= =======
Unit value, end of
year/period............ $4.36 $3.75 $3.39 $2.82 $2.95 $2.15 $1.80 $1.43 $1.05
======= ======= ======= ======= ===== ========= ========= ======= =======
Units outstanding, end
of year/period......... 643,537 456,304 281,905 131,650 322 2,289,562 1,386,311 599,553 106,710
======= ======= ======= ======= ===== ========= ========= ======= =======
</TABLE>
XIV
<PAGE>
AMERICAN LIFE SEPARATE ACCOUNT NO. 2
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
SCUDDER
----------------------------------------------------------------------
BOND FUND CAPITAL GROWTH FUND
---------------------------------- -----------------------------------
1997 1996 1995 1994 1993 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $11.48 $11.30 $ 9.69 $10.32 $10.24 $22.11 $18.64 $14.67 $16.46 $16.10
====== ====== ====== ====== ====== ======= ====== ====== ====== ======
Unit value, end of
year/period............ $12.37 $11.48 $11.30 $ 9.69 $10.32 $29.64 $22.11 $18.64 $14.67 $16.46
====== ====== ====== ====== ====== ======= ====== ====== ====== ======
Units outstanding, end
of year/period......... 7,927 3,877 2,407 799 -- 159,853 73,641 42,366 22,116 59
====== ====== ====== ====== ====== ======= ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
SCUDDER AMERICAN CENTURY
---------------------------------- ---------------------------------
INTERNATIONAL FUND VP CAPITAL APPRECIATION FUND
---------------------------------- ---------------------------------
1997 1996 1995 1994 1993 1997 1996 1995 1994 1993
------ ------ ------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period............ $13.43 $11.85 $10.80 $11.06 $10.36 $11.53 $12.18 $ 9.39 $9.61 $9.38
====== ====== ====== ====== ====== ====== ====== ====== ====== =====
Unit value, end of
year/period............ $14.46 $13.43 $11.85 $10.80 $11.06 $11.04 $11.53 $12.18 $9.39 $9.61
====== ====== ====== ====== ====== ====== ====== ====== ====== =====
Units outstanding, end
of year/period......... 78,166 70,139 29,549 52,296 38 44,293 67,688 56,618 13,116 20
====== ====== ====== ====== ====== ====== ====== ====== ====== =====
</TABLE>
<TABLE>
<CAPTION>
CALVERT FIDELITY VIP
----------------------------- --------------------
RESPONSIBLY INVESTED FUND EQUITY-INCOME FUND
----------------------------- --------------------
1997 1996 1995 1994 1997 1996 1995
------- ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period................ $2.23 $2.01 $1.57 $1.64 $21.93 $19.43 $16.30
======= ======= ====== ====== ====== ====== ======
Unit value, end of
year/period................ $2.65 $2.23 $2.01 $1.57 $27.77 $21.93 $19.43
======= ======= ====== ====== ====== ====== ======
Units outstanding, end of
year/period................ 194,166 100,573 45,392 18,308 94,213 60,979 17,958
======= ======= ====== ====== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
FIDELITY VIP II
-------------------------------------------
CONTRA FUND ASSET MANAGER FUND
---------------------- --------------------
1997 1996 1995 1997 1996 1995
------- ------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Unit value, beginning of
year/period....................... $16.59 $13.85 $11.43 $17.72 $15.66 $14.04
======= ======= ====== ====== ====== ======
Unit value, end of year/period..... $20.36 $16.59 $13.85 $21.14 $17.72 $15.66
======= ======= ====== ====== ====== ======
Units outstanding, end of
year/period....................... 212,606 153,360 29,132 65,125 36,872 5,561
======= ======= ====== ====== ====== ======
</TABLE>
XV
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To The American Life Insurance Company of New York:
We have audited the accompanying statement of assets and liabilities of
American Life Separate Account No. 2 as of December 31, 1997, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the
financial highlights for each of the five years in the period then ended.
These financial statements and financial highlights are the responsibility of
the Separate Account's management. Our responsibility is to express an opinion
on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
American Life Separate Account No. 2 as of December 31, 1997, the results of
its operations for the year then ended, the changes in its net assets for each
of the two years in the period then ended, and the financial highlights for
each of the five years in the period then ended, in conformity with generally
accepted accounting principles.
/s/ Arthur Andersen LLP
New York, New York
February 20, 1998
XVI
<PAGE>
THE AMERICAN LIFE INSURANCE COMPANY OF NEW YORK
320 Park Avenue New York, New York 10022-6839 212-224-1700
A subsidiary of Mutual of America Life Insurance Company
Mutual of America Life Insurance Company is a Registered Broker-Dealer and
Distributes the variable products of The American Life Insurance Company of New
York
